Kosmopoulos et al. v. Constitution Insurance Co. of Canada et al., (1987) 74 N.R. 360 (SCC)

• Judge: Beetz, McIntyre, Chouinard, Lamer, Wilson, Le Dain and La Forest, JJ.
• Court: Supreme Court of Canada
• Case Date: Thursday January 29, 1987
• Jurisdiction: Canada (Federal)
• Citations: (1987), 74 N.R. 360 (SCC);[1987] 1 SCR 2;46 MVR 79;22 CCLI 296;AZ-87111013;21 OAC 4;202 APR 436;74 NR 360;36 BLR 233;[1987] ILR 1;JE 87-218;34 DLR (4th) 208;1987 CanLII 75 (SCC);[1987] SCJ No 2 (QL)

Kosmopoulos v. Constitution Ins. Co. (1987), 74 N.R. 360 (SCC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Andreas Kosmopoulos and Kosmopoulos Leather Goods Limited v. Constitution Insurance Company of Canada, Simcoe & Erie General Insurance Company, Providence Washington Insurance Company, Security National Insurance Company, Upper Canada Insurance Company, The Contingency Insurance Company Limited and Aristides Roussakis and Art Roussakis Insurance Agency Limited

(No. 17911)

Indexed As: Kosmopoulos et al. v. Constitution Insurance Co. of Canada et al.

Supreme Court of Canada

Beetz, McIntyre, Chouinard, Lamer, Wilson, Le Dain and La Forest, JJ.

January 29, 1987.

Summary:

Kosmopoulos operated a sole proprietorship, which he incorporated as its sole shareholder. He continued to personally run the business; he was named as the insured in an insurance policy on the assets and the lease continued in his name. After the assets were damaged by fire the insurers denied that he had an insurable interest. Kosmopoulos and the company brought an action against the insurers for the insurance proceeds and against the insurance agent for damages. The Ontario High Court in a judgment reported [1981] I.L.R. 1-1449 allowed the action against the insurers and held that Kosmopoulos had an insurable interest. If Kosmopoulus had had no insurable interest, the court would have found the agent liable for failing to insure in the correct name. The insurers appealed.

The Ontario Court of Appeal in a judgment reported [1983] I.L.R. 11660; 149 D.L.R.(3d) 77; 42 O.R.(2d) 428, dismissed the appeal. The insurers appealed.

The Supreme Court of Canada dismissed the appeal and held that Kosmopoulos as sole shareholder of the company had an insurable interest in the company's assets.

Bailment - Topic 4021

For benefit of bailor and bailee - Master and servant - General - The sole shareholder of a company was also its manager - The owner argued that he was a bailee of the company's assets for the purpose of giving him an insurable interest in the assets - The Supreme Court of Canada held that as the company's director and senior employee the owner was not a bailee of the assets; rather his possession and control as director and senior employee were that of the company - See paragraphs 16 to 17.

Company Law - Topic 311

Nature of corporations - Lifting the corporate veil - One man company - The sole shareholder of a company insured the company's assets - The Supreme Court of Canada refused to lift the corporate veil to determine that the company's assets were actually his for the purpose of giving him an insurable interest in the assets - See paragraphs 12 to 17.

Insurance - Topic 2286

Insurable interests - What constitutes - Corporate assets - A man operating a sole proprietorship incorporated the business - He continued to be the named insured in an insurance policy on the assets - The assets were damaged by fire and the insurers denied that he had a insurable interest - The Supreme Court of Canada held that the sole shareholder of the company had an insurable interest in the company's assets, because he had a moral certainty of advantage or benefit from the assets - See paragraphs 18 to 46.

Cases Noticed:

Guarantee Co. of North America et al. v. Aqua-Land Exploration Limited, [1966] S.C.R. 133, not folld. [paras. 9, 42].

Wandlyn Motels Limited v. Commerce General Insurance Company, [1970] S. C.R. 992, not folld. [paras. 9, 42].

American Indemnity Co. v. Southern Missionary College (1953), 260 S.W. 2d 269 (Tenn.), refd to. [paras. 9, 12].

Salomon v. Salomon & Co., [1897] A.C. 22 (H.L.), consd. [para. 12].

Associated Portland Cement Manufacturers (1910) Ltd. v. Ashton, [1915] 2 K.B. 1, appld. [para. 16].

Lucena v. Craufurd (1806), 2 Bos. & Pul. (N.R.) 269; 127 E.R. 630, consd. [para. 19].

Patterson v. Harris (1861), 1 B. & S. 336; 121 E.R. 740, consd. [para. 25].

Wilson v. Jones (1867), L.R. 2 Ex. 139, consd. [paras. 25, 26].

Blascheck v. Bussell (1916), 33 T.L. R. 51 (K.B.), consd. [para. 25].

Stock v. Inglis (1884), 12 Q.B.D. 564 (C.A.), consd. [paras. 28, 42].

Zimmerman v. St. Paul Fire and Marine Insurance Co. (1968), 1 D.L.R.(3d) 277 (Sask. C.A.), refd to. [paras. 29, 36].

Aqua-Land Exploration Ltd. v. Guarantee Co. of North America (1964), 44 D.L.R.(2d) 645 (Ont. C.A.), refd to. [para. 29].

Norwich Union Fire Insurance Society Ltd. v. Traynor, [1972] N.Z.L.R. 504 (C.A.), refd to. [para. 29].

Clark v. Scottish Imperial Insurance Company (1879), 4 S.C.R. 192, not folld. [paras. 30, 42].

Keefer v. Phoenix Insurance Co. (1901), 31 S.C.R. 144, consd. [para. 39].

Van Cure v. Hartford Fire Insurance Co. (1969), 253 A.2d. 663 (Penn. S. C.), consd. [para. 41].

Pacific National Fire Insurance Co. v. Watts (1957), 97 So.2d. 797 (Ala. S.C.), consd. [para. 41].

Royal Insurance Co. v. Sisters of the Presentation (1970), 430 F.2d. 759 (9th Cir.), consd. [para. 41].

Statutes Noticed:

Business Corporations Act, S.O. 1982, c. 4, sect. 134(1)(b) [para. 39]; sect. 184, sect. 186, sect. 187, sect. 188, sect. 189 [para. 26]; sect. 244(b)(iii), sect. 245, sect. 247(1), sect. 247(2) [para. 39].

California Insurance Code, para. 281 [para. 41].

Insurance Act, R.S.O. 1980, c. 218, sect. 125, stat. cond. 1, sect. 125 stat. cond. 2 [para. 23]; sect. 156, sect. 258 [para. 29].

Louisiana Insurance Code, R.S. 22: 614, para. 614B [para. 41].

Utah Insurance Code, sect. 31A-21-104(2)(b) [para. 41].

Wisconsin Insurance Code, sect. 631.07 [para. 41].

Authors and Works Noticed:

Baer, Marvin G., "Annotation" (1983), 1 C.C.L.J. 83 [para. 41].

Baer, Marvin G., "Recent Developments in Canadian Law: Insurance Law" (1985), 17 Ottawa L. Rev. 631 [para. 29].

Brown and Menezes., Insurance Law in Canada (1982), pp. 84 [para. 22]; 69 [para. 27]; 71 [para. 34]; 74 [para. 38]; 81-84 [para. 41].

Campbell, A.J., Some Aspects of Insurable Interest (1949), 27 R. du B. Can. 1 [para. 41].

Colinvaux, Raoul., The Law of Insurance (5th Ed. 1984), pp. 40-42 [para. 41].

Couch, George James, Cyclopedia of Insurance Law (2nd Ed. 1984), vol. 3, pp. 30-51 [para. 41].

Gower, L.C.B., Modern Company Law (4th Ed. 1979), pp. 112 [para. 12]; 138 [paras. 13, 39].

Harnett, Bertram, and John V. Thornton, Insurable Interest in Property: A Socio-Economic Reevaluation of a Legal Concept (1948), 48 Columbia L. Rev. 1162 [paras. 23, 30, 31, 34, 41].

Hasson, Reuben A., Reform of the Law Relating to Insurable Interest in Property - Some thoughts on Chadwick v. Gibraltar General Insurance (1983-84), 8 Can. Bus. L.J. 114 [para. 41].

Kahn-Freund, O., Some Reflections on Company Law Reform" (1944), 7 Man. L. Rev. 54 [para. 38].

Keeton, Robert, Basic Text on Insurance Law (1971), pp. 117 [paras. 27, 33, 36]; 112-119 [para. 41].

McLeod, Rod M., Aqua-Land Exploration Ltd. v. Guarantee Co. of North American et al.: Insurable Interest in an Indemnity Policy (1966), 24 U. of T. Fac. L. J. 154 [para. 41].

Ninth Decennial Digest, vol. 21. Part 1, American Digest System 1976-81., Insurance, paras. 114, 115(1), 115(2) [para. 41].

Sutton, K.C.T., Insurance Law in Australia and New Zealand (1980), pp. 213-221 [para. 41].

Ziegel, Jacob S., Shareholder's Insurable Interest - Another Attempt to Scuttle the Macaura v. Northern Co. Doctrine: Kosmopoulos v. Constitutional Insurance Co. (1984), 62 Can. Bar Rev. 95 [paras. 14, 41].

Counsel:

Ronald J. Rolls, Q.C., for the appellant;

W.P. Somers, Q.C. and Christine Mauro, for the respondent Kosmopoulos;

V.R.P. Bersenas, for the respondent Roussakis.

This case was heard on November 1 and 6, 1985, at Ottawa, Ontario, before Beetz, Estey, McIntyre, Chouinard, Lamer, Wilson, Le Dain and La Forest, JJ., of the Supreme Court of Canada.

On January 29, 1987, the judgment of the Supreme Court of Canada was delivered and the following opinions were filed:

Wilson, J. (Beetz, Lamer, Le Dain and La Forest, JJ., concurring) - see paragraphs 1 to 44;

McIntyre, J. - see paragraphs 45 to 46.

Chouinard, J., took no part in the judgment.